Mortgage Rate Cheap Money Days Might Be Ending

Mortgage Rate Cheap Money Days Might Be Ending

Local
homeowners are among the keenest observers of mortgage rates because
they are such a large factor in the long-term investment that is
their house. It’s the factor that determines if and when
refinancing makes sense; the factor that plays a large part in
heating (or cooling) the overall Dayton area real estate market.

For the most
part, home buyers simply accept the mortgage rate in that happens to
be currently offered when they decide buy a home. The timing of their
purchase is generally triggered by their own financial fortunes, or
when the right home comes along, or when some outside circumstance
forces them to find new digs—or any of a dozen reasons other
than the current mortgage rates.

If they even
consider how mortgage rates come into play, they may look to
financial experts—but only for guidance in how to land the lowest
available rates (and that answer is always the same: “protect your
credit score”). Few consider whether a mortgage rate dip should in
itself be the determining factor for triggering their home
purchase—but it wouldn’t be such a crazy idea.

So, why do I
bring this up now? Let me quote the way Tim Logan, the housing and
residential real estate columnist for the L.A. Times, led off
his article at the end of last month: “If
you’re borrowing to buy a house, there’salmost
never been a better time to do it.”

He and other residential market
observers are not just pointing to the surprisingly low national
interest rates reported by Freddie Mac—although that’s certainly
the case. Per the Times: “Interest rates on an average
30-year fixed-rate mortgage hit 4.1% this week, a low for the year.”
Only last year, the basement-level interest rate phenomenon was
widely predicted to come to an end (and rates did begin to rise). But
as Logan described it, rates have “been bouncing in the low 4%
range for months, not quite record territory, but not far from it.”
(I’ll echo that: at this point, they’re close to as low as they
ever get.)

But perhaps the most compelling
reason for the urgency in that “never been a better time”
statement is this prediction (also from the L.A. Times): “…fairly soon,
forecasters say—interest rateswill rise, posing
housing-market hurdles.”

The “hurdles” would be a natural
consequence of any upward spike in mortgage rates. In that scenario,
homeowners will become reluctant to part with their own home since a
new mortgage would carry higher interest rates. Not just that: if
that causes the supply of homes on the market to tighten, prices will
do what supply shortages always cause—higher prices.

Such a scenario
is far from certain. But what isn’t in doubt is today’s decidedly
low interest rates. If all this has you thinking of buying or selling
this fall, as the Times says,
your timing couldn’t be better…an excellent reason to give me a
call me today!

Author:John BiermanPhone: 937-371-9139Dated: September 16th 2014Views: 2,615About John: I am entering my 9th year as a licensed real estate agent. For the last 9 years I have had the pleas...